Global tech giants Nvidia Corp and ASML Holding NV, both leaders in the AI revolution, experienced a significant dip in their stock prices following the rise of Chinese startup DeepSeek. The buzz around DeepSeek’s latest AI model, which claims to rival industry benchmarks like ChatGPT while running on less advanced chips, has caught the tech world’s attention.
DeepSeek’s AI assistant recently soared to become the top-rated free app on Apple’s App Store in the United States, overtaking even the widely acclaimed ChatGPT. The rapid success of this Hangzhou-based startup, founded in 2023, has sent ripples through the global AI market.
The company’s breakthrough V3 model is described by its creators as one that “tops the leaderboard among open-source models and rivals the most advanced closed-source models globally.” This achievement comes after using Nvidia’s H800 chips for training, reportedly spending under $6 million—a fraction of what competitors have invested.
As news of DeepSeek’s success spread, Nvidia and ASML—two key players in the AI boom—faced declines in their stock prices. Nvidia’s shares dropped by 11.54%, closing at $126.16 on NASDAQ compared to the previous close of $147.22. Meanwhile, ASML saw an 11.7% decrease, trading at €618.5 on the Amsterdam Stock Exchange, down from €700.70.
These companies have been at the forefront of the AI revolution: Nvidia designs advanced semiconductors crucial for AI applications, while ASML develops high-end chipmaking machines. Nvidia’s meteoric rise in recent months even propelled its co-founder and CEO, Jensen Huang, into the ranks of the world’s top 10 richest individuals.
DeepSeek’s rise highlights the resilience of Chinese tech companies in the face of stringent U.S. export restrictions on advanced chips.
Since 2021, the U.S. government has expanded bans to prevent cutting-edge chips from being exported to China, aiming to curb the training of AI models by Chinese firms. While many Chinese AI ventures struggled to gain traction under these restrictions, DeepSeek has emerged as a notable exception.
The startup’s ability to achieve performance parity with major AI players, despite using less advanced hardware, signals a potential shift in the AI landscape. It also poses a challenge to established players who rely on premium chips and massive budgets for training their models.
DeepSeek’s disruptive entry into the AI market underscores the rapidly evolving nature of this industry. With its scalable and cost-efficient model, the startup has not only shaken investor confidence in established players but also set the stage for more competition in the global AI race.